By JOHN COOK, SEATTLE POST-INTELLIGENCER REPORTER

Published 10:00 pm, Friday, December 2, 2005

Big Fish Games just hooked a whopper. The Seattle distributor of more than 250 online computer games -- including Poker Superstars, Mahjong Mania and Totem Treasure -- landed a $5 million round of financing on Friday.

The money, which was provided by angel investors, will be used to market the online gaming site and expand internationally with Web sites in as many as seven languages, said Paul Thelen, the former RealNetworks manager who founded Big Fish Games three years ago with $10,000 in savings.

Thelen said the 55-person company, profitable since its inception, is growing rapidly as more people download puzzle, word and card games that can be played for short bursts during lunch breaks or after the kids go to bed. Known as casual gaming, this little-known corner of the computer gaming world is attracting interest from giants such as Microsoft, Yahoo! and AOL that are attempting to attract older players who prefer online games such as canasta or Scrabble to first-person-shooter titles such as Halo or Half Life.

"With casual games, you expand your reach and get these other demographics that maybe wouldn't typically go pick up an Xbox," said Tim Williams, director of sales and marketing at The Game Initiative, which will host the second annual Casual Games Conference in Seattle next summer. It is estimated that almost 100 million people in the United States will play a computer game this year, with IDC analyst Schelley Olhava predicting that the market will more than double in the next two years to $2.2 billion.

Thelen's $10,000 bet on casual games appears to be paying off at just the right time.

Big Fish was the second-fastest-growing online gaming site in the United States in October, and its 2.4 million unique visitors for the month put it in the top 10 of all gaming sites, according to ComScore Media Metrix. Worldwide, the company attracted 7.8 million visitors in August, with visitors spending an average of 17 minutes on the Web site each day.

Thelen, who played an integral role in starting the RealArcade business at RealNetworks in 1999, declined to disclose revenue. But he said the company records more than 150,000 game downloads every day. Up to 4 percent of those people who try a game end up purchasing it -- a conversion rate that exceeds some competitors, Thelen said. For unlimited play, the games cost about $20 to download.

The recent success at Big Fish led to plenty of interest from deep-pocketed venture capital firms, though Thelen spurned two offers in order to take money from unnamed angel investors. He said that made the most sense because the company is profitable and didn't need bucketloads of money to build the business.

"VCs are very beneficial for companies in certain positions. We just felt with our track record and the amount of money we were raising, it wasn't a good fit," he said.

Daniel Bernstein, chief executive of Sandlot Games, a 10-person online game developer in Bothell, said Big Fish does a good job of distributing casual computer games that appeal to people in their 30s, 40s and 50s. Sandlot's game titles -- including Granny in Paradise and Tradewinds 2 -- are among the most popular on the Big Fish site.

"They did a very good job of merchandising their own Web site, which is a tough thing to do starting from ground zero," said Bernstein, who views Big Fish as both a partner and a competitor. "I have a lot of respect for Paul and his ability to do that."

Thelen -- who holds an MBA from Stanford and an electrical engineering degree from the University of Washington -- takes a methodical approach to marketing the business. He's tried nearly every tactic to attract customers -- from paper coupons in Valpak to mass mailings of game CDs. In any given month, Thelen said, the company has 50 to 60 different marketing campaigns going on.

"We are very analytical about how we approach marketing," Thelen said. "If there is a way to get a message in front of a consumer, we have tried it. And the ones that pay out, we continue to fund. And the ones that don't, we move on to something new."

Building a brand name is important for Thelen, who faces competition from well-known gaming portals such as Yahoo!, RealNetworks and Microsoft. In addition to those heavyweights, smaller Seattle game houses such as PopCap, HipSoft and 180solutions' Zango unit are attacking the market.

Julie Pitt, general manager of publishing and distribution for RealNetworks' games business, said the competitive landscape is unusual because most of the companies also help distribute each other's games.

"It is a really interesting space," Pitt said. "Everybody knows everybody else." That's especially the case in Seattle -- a "hotbed" for casual games. Pitt thinks there is enough room for companies to co-exist in a market that she said many people are just "waking up to."

She called Thelen "a really, really smart guy." But she said Big Fish has taken a different approach, vowing to release a new game every day.

"We are a little more particular about the content we release into our service," she said.

Thelen -- who hopes to build Big Fish into a global brand -- believes he is on the right track with a 180 percent annual growth rate. And he believes that will eventually lead to a nice payout.

"If all the seeds we are planting turn into large trees, then an IPO is always a possibility," Thelen said. "More likely is probably an acquisition by a media company that wants to get into this space."